So, you are all set to incorporate your LLC and realize you need a registered agent. It is a statutory requirement. To save on paying for an external agent, you think you can act as your registered agent. Is that a good idea? Let us first find out what a registered agent is and what it entails, then let us decide whether or not you can or should act as your own registered agent.
What Is a Registered Agent?
Registered agents are persons or entities that will be the first point of contact your corporation has with government agencies. A registered agent will receive any summons issued to your corporation and is required to follow up on all government compliances. Registered agents may also be called resident agents, statutory agents, or agents for service of process depending on the context or the state.
There are times when a corporation needs to be served a legal notice. The notice has to be accepted by someone on behalf of the corporation who has to be present in the office during office hours. This person would have to sign on behalf of the corporation. Then this person would have to follow up on the legal notice or summons. The whole point of having an agent for service of process is to have a proper physical address so that your corporation can be contacted.
If a corporation does not have a person to receive the legal summons when the process server comes to serve it, it gives the person filing the lawsuit the opportunity to obtain “substituted service”. This means that the lawsuit can proceed—but the corporation foregoes the right to a defense.
Other than this, a registered agent has to keep track of compliance notices and filing of annual reports. All these are required so that your company can function smoothly in the state where you do business.
Here are some points you need to keep in mind regarding registered agents.
- When registering an LLC or corporation, you are required to name a registered agent.
- This registered agent has to have a physical address, not a post box number so that the corporation can be contacted by government agencies.
- The registered agent needs to be physically present during working hours to accept any legal summons issued to the LLC.
- Besides accepting service of process, a registered has to keep track of all local government compliances for the company.
- If your corporation does business in multiple states, then you need a registered agent in each of those states. Note that each state may have its own regulations regarding registered agents and compliances.
Who Can be a Registered Agent?
The basic requirements for a registered agent are as follows:
- The minimum age is 18 years.
- The agent must have a physical address in the state where the LLC operates.
- The agent should be a resident of the state where the corporation operates.
- The agent should be available in the office during working hours.
Another question that may arise is: can an entity like an LLC be a registered agent? The answer is yes as long as the state where the business operates allows this and as long as the entity has an office in that state.
Yet another question could be whether the LLC can be its own agent or not. The answer is that most states do not allow this option. Only a couple of states are open to this, so make sure you check this out first.
Should You Be Your Own Registered Agent?
Well, you could be your own registered agent, but you need to be prepared for the following:
- You would need to give a physical address. If you give your address, you would be inundated with official as well as personal mails.
- You may receive service of process notices in front of your family members, or staff and customers if you have given your office address as the official address, which may be embarrassing.
- You would have to be present when a summons is served or you could lose out. So, you will have to ensure you are in your office during working hours.
- You would have to be organized and proactive to ensure compliance and follow up on all legal and compliance issues. This leaves you less time to work on other issues.
- And remember, you need to be present and a resident in each state where you have your offices. This can be a physical impossibility.
Though you can be the registered agent for your LLC, the actual cost in terms of loss of privacy, flexibility in timings, compliance fears, and peace of mind are much more than just paying a little extra to hire a professional registered agent service.
Hiring a Professional Registered Agent Service
The following illustration from TRUiC is quite apt to show how a registered agent service provides a kind of shield around the LLC, accepting all the compliance notices and legal summons on behalf of the LLC. This kind of service provides the LLC peace of mind, flexibility in terms of timings, privacy, and on-the-ball compliance.
Keeping the illustration in mind, there is no doubt that you may want to hire an external registered agent or retain a registered agent service to handle all your compliance and regulatory needs.
There is no straight or simple answer to the question of whether you can be your own registered agent. You could be your own agent, but that would require you to juggle many different hats. Rather than taking on the task just to save a few dollars, it may be better to let a professional handle the job.
It does not make sense trying to do something if you lose your freedom to move about and your peace of mind in return. However, if you want peace of mind and flexible timings, it may be a good idea to hire a registered agent service so that you can peacefully concentrate on your business.
- ‘Should I Use A Registered Agent Service?’, available at https://howtostartanllc.com/registered-agent/should-I-use-a-registered-agent-service
- ‘What Is A Registered Agent?’, available at https://howtostartanllc.com/what-is-a-registered-agent
- ‘What Is Service Of Process For An LLC?’, available at https://howtostartanllc.com/registered-agent/what-is-service-of-process
- ‘Can I Be My Own Registered Agent?’, available at https://startupsavant.com/can-you-be-your-own-registered-agent
- ‘What is required to become a registered agent?’, available at https://www.wolterskluwer.com/en/solutions/ct-corporation/what-is-required-to-become-a-registered-agent
- ‘Can I serve as my own registered agent to form an LLC?’, available at https://www.govdocfiling.com/faq/can-serve-registered-agent-form-llc/
- ‘Entrepreneurs: Should You Act As Your Own Registered Agent?’, available at https://fundbox.com/blog/entrepreneurs-act-registered-agent/
- ‘The Pros and Cons of Acting As Your Own Registered Agent’, available at https://www.kpmgspark.com/blog/pros-and-cons-of-acting-as-your-own-registered-agent
- ‘6 Reasons You Shouldn’t Be Your Own Registered Agent’, available at https://www.legalzoom.com/articles/6-reasons-you-shouldnt-be-your-own-registered-agent
- ‘Should You Hire a Registered Agent or Be Your Own?’, available at https://www.score.org/resource/should-you-hire-registered-agent-or-be-your-own#:~:text=A%20registered%20agent%20is%20simply,be%20its%20own%20registered%20agent